Elon Musk's Big Bet: Tesla to Ramp Up AI Development with Nvidia's Powerful Chips

Tesla Inc TSLA may install 85,000 Nvidia Corp NVDA H100 chips by year-end to train its artificial intelligence (AI) models.

If CEO Elon Musk proceeds with this plan, Tesla will surpass tech giants like Amazon.Com Inc AMZN and Alphabet Inc GOOG GOOGL Google as a significant Nvidia customer.

During Tesla’s first quarterly earnings report for 2024, Musk disclosed that the company currently possesses 35,000 H100 chips, the most advanced and expensive graphics processing units designed for AI applications, CNBC reports.

These chips are vital for Musk’s AI initiatives, which include the development of advanced robots like Optimus Bot and Robotaxi and a supercomputer named Dojo.

Reports indicate that Meta Platforms Inc META is Nvidia’s largest customer.

According to the World Economic Forum, Nvidia produced 550,000 chips last year, and companies must wait until 2024 to secure additional supplies.

Microsoft Corp MSFT is the second-largest buyer, as stated by Omdia, with an order of 150,000 GPUs in 2023. Other significant purchasers include Oracle Corp ORCL, Tencent Holding Ltd TCEHY, Google, and Amazon, each reportedly acquiring 50,000 chips. Meta, Microsoft, Google, and Amazon nearly account for 40% of Nvidia’s revenue. CNBC writes.

Musk had mocked Nvidia’s substantial market capitalization loss on April 19, calling the 10% stock decline “rookie numbers” on X, formerly Twitter.

Nvidia experienced a significant drop in stock value, shedding $211 billion in market capitalization, marking the second-largest single-day loss in U.S. stock market history.

This steep decline was triggered by disappointing earnings from ASML Holdings NV ASML and a pessimistic market outlook from Taiwan Semiconductor Manufacturing Co TSM.

Meanwhile, analysts maintained their bullish stance on Nvidia, expecting it to rule the accelerator market primarily backed by its Blackwell product.